Morning Commentary

March corn up 3 at $3.795

March beans up 13 ¼ at $9.285

The DOW is down

USD is weaker

Crude oil up $.20 at $53.99

Good morning,

Corn bulls are wanting to hear more details about Chinese trade negotiations and the possibility of China buying U.S. corn, ethanol and DDGs in large quantities. The Chinese have reportedly “made arrangements” to purchase more U.S. agricultural products, but still no detailed specifics exist. Bears are worried that the March 1 deadline is quickly approaching and will pass without a hard deal being inked. Bulls continue to believe a trade deal and or major compromise is near. Weather in South America looks to be more cooperative as the forecast improves. The short term trend is slightly positive.  Despite Thursday’s setback, the market remains in position to test the mid-upper 380 area.  Closing under 375.5 would undermine the outlook.  Given a sell signal Thursday, system types will find buy stops around 384.  Options are implying a 376.5-382.75 trading range the rest of the day.

Soybean bulls are happy to hear talk that China is planning to buy more U.S. soybeans. There was some initial confusion, but from what I understand, China is expected to purchase another 5 MMTs of U.S. soybeans, on top of the estimated 5 MMTs they have recently purchased. Keep in mind, Brazil has now harvested about 15% of their new-crop bushels and supply is moving to the ports and becoming more readily available. Meaning the window of opportunity for U.S. exporters is starting to more rapidly close. We certainly don’t want to scoff at another 5 MMT purchase, but with the U.S. balance sheet busting at the seams it will still be tough to paint a bullish picture. The good news is Brazil’s crop has faced some weather headwinds. Rather than Brazil harvesting another new record, like the USDA was forecasting at 122.0 MMTs, it looks like their production is going to pullback to around 112.0 to 116.0 MMTs. The short term trend is positive.  Target medium term trend line resistance at 936.  We need a close under 905.25 to undermine the outlook.  Given a sell signal Thursday, system types will find buy stops above 929.   Options are implying a 919-936 trading range the rest of the day.

Brazilian fertilizer company Heringer has decided to close several of its plants and distribution centers as part of a restructuring plan to lower its debt burden. Heringer, one of the largest players in the Brazilian fertilizer market, sent a message to workers on Thursday in at least 10 installations, including plants and regional offices, advising them that they faced closure, according to a e-mail message seen by Reuters. Workers in those units would be laid off. Heringer has around 3,000 employees. (Source: Reuters)

In 2018, for the first time, Brazil exported more than $100 billion worth of farm products. The total, up 6% from 2017, was driven mainly by soybeans, beef, and cellulose pulp, with China as the No. 1 market. This data was provided by the Brazilian Confederation of agriculture and Livestock (CNA).

According to a study commissioned by the U.S. Dairy Export Council, the U.S. share of Japan’s dairy market could drop by half over the next decade if the the United States does not negotiate trade agreements to overcome the advantages given to competitors by the TPP pact and an EU-Japan free trade agreement. (Source: USDEC)


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